mp4 for compatibility, literally click and play on 99% of devices, most OSes come preloaded with software to play mp4 files.
mkv for functionality, it's a much better format in general but as you mentioned, they're not tech savvy and it is possible that they may not gave VLC or any other 3rd party video player so they may face issues, I think it'd wiser to give them mp4 files.
And for encoding, you can either encode in H.265 or AV1, both are amazing, they'll help you save almost half of your storage, since they're way better than H.264, the quality will be indistinguishable but the files sizes will be halved.


